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(Via BigStock.)

LAS VEGAS — If you’re involved in information technology and the cloud, you’ve heard it before: trade capital expense (capex) for operating expense (opex)! Save tons of money on the cloud!

You may also realize it’s not that simple. For any piece of infrastructure or platform as a service — computing, storage, networking, web services — cloud companies charge different per-hour (or even per-minute) fees, with discounts and spot pricing further complicating matters. If the cloud does save you money, it’s mainly thanks to your own careful analysis.

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Take the cost of computing. On average, compute resources represent 75-80 percent of your cloud spend, according to impartial cloud-management firm RightScale. Each major cloud provider offers different discounts for compute services, which RightScale has cataloged and compared as part of a new blog post on the eve of the Amazon re:Invent conference here.

Image via Shutterstock.
Image via Shutterstock.

Amazon Web Services‘ compute discount is called Reserved Instances (RIs). RIs are not actual instances but can be thought of as discount coupons applicable to instances that meet certain criteria (such as region, availability zone, instance family, and operating system). You get the discount in exchange for making a one-year or three-year commitment, with the longer commitment giving a higher discount. If you also pay for some or all of that committed usage up front, the discount gets larger. Then there are convertible RIs, a newer type of three-year RI that gives a smaller discount but allows moving the discount among different instance families during its term.

RI discounts range from 24 to 75 percent, depending on the RI term, the instance type and the region. Often one-year, no-upfront RIs are a good starting point, RightScale said. Caution should be used in buying three-year RIs, since your actual usage may change drastically over three years. Though convertible RIs allow adapting to new instance types, they offer only 5-6 percent extra discount over standard one-year RIs, while locking you in for three years instead of one.

AWS recently announced some pricing cuts, which RightScale said it would reflect in updates to its post once the cuts go into effect.

Via Bigstock.
Via Bigstock.

Microsoft Azure discounts come from the Enterprise Agreement (EA) you may get when you sign up to use the service. EAs offer discounts of 15-45 percent, depending on the level of usage you commit to.

Google Cloud provides the simplest approach to saving money on compute resources through its Sustained Usage Discount (SUD). The SUD kicks in automatically and requires no upfront commitment. It gives a discount on each monthly bill based on the percentage of time that instances in a certain family were running during the month. Google Cloud will also combine different instances of the same type when possible to give the best discount level.

Here’s the bottom line, according to RightScale:

  • If you are not using AWS RIs and don’t have a Azure EA discount, Google Cloud is going to be cheapest compute option, in most scenarios.
  • Azure consistently matches or beats AWS’s price for on-demand compute.
  • If you commonly need the performance requirements of local solid-state disk, you’re going to pay a premium for it on Google Cloud.
  • AWS is likely not going to be the cheapest cloud provider in most scenarios, but it is often in the middle.
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